The Green Sheet Online Edition
September 8, 2025 • 25:09:01
Fake online reviews pose a payments compliance risk
Fake online reviews were once isolated to shady sellers looking to boost their ratings. But now? Fake reviews are an entire economy of their own, powered by AI. While regulators and online platforms are cracking down on merchants that sell this deceptive content, payment providers are getting swept into the compliance and financial fallout. Fake reviews are no longer just a "buyer beware" risk for consumers. The sprawling fake review economy has big financial consequences for global commerce and the payments industry.
Fake reviews are big business
Until recently, fake reviews were often easy to spot. The manual efforts of bad actors behind them produced tell-tale signs of artificial attempts to build consumer trust.
The landscape has matured dramatically with support from AI. Sophisticated actors now produce large volumes of AI-generated content that can convincingly simulate authentic human opinions. It's a full-fledged economy of deception, and payment providers are being drawn in by unintentionally facilitating the transactions that sustain it.
Unfortunately, the problems for payment providers can't be solved by denying merchant accounts to fake review sellers. These merchants use deception to appear legitimate and benign, using complex tactics to mask the real purpose of their business. They may easily bypass traditional diligence and merchant onboarding checks, exposing their payment providers to serious fines and reputation damage.
How fake review merchants exploit the system
Payment providers must understand fake review sellers' deceptive tactics to effectively counter them.
- Transaction laundering: Fraudsters often use an innocuous-looking front site as the face of the business. They use the benign-appearing merchant account to process payments, but the product sold behind the scenes is fake reviews. Typically, the site content is built well enough to pass traditional underwriting, then left dormant while a high-volume deception business runs in the background.
- Rapid merchant cycling: To avoid detection, fake review merchants may frequently change their business names, merchant category codes and URLs. This merchant-hopping behavior helps them evade blacklists and consistent transaction pattern detection.
- Cross-border activity: Fake review operators may spread different parts of the operation across multiple jurisdictions. This decentralization can obscure the true nature of the merchant's activity and make identification difficult.
Escalating legal and regulatory risks
Payment providers must navigate growing legal uncertainty, learning to monitor and respond to a new set of red flags effectively. The risks are focused in two primary areas:
- FTC enforcement: In 2024, the FTC finalized the Trade Regulation Rule on the Use of Consumer Reviews and Testimonials. Among other things, it prohibits the sale or purchase of fake consumer reviews, testimonials or fake engagement indicators, such as likes, shares and follows. Importantly for payment providers, it gives the FTC authority to impose penalties up to $51,744 per violation. Heavy FTC penalties and the resulting bad press can drive a merchant out of business, leaving its payment provider to absorb locked-up reserves and unpaid chargebacks as losses. The abrupt collapse in transaction volume can then push the provider's risk scores above card-network thresholds, exposing it to higher fees or sanctions.
- Card network fines: Card networks recognize the profound damage fake reviews inflict on consumer trust and on payment system integrity, so they are increasing their enforcement actions against payment providers. Those in non-compliance with network rules can face sizable fines. Card networks are conveying that the responsibility for maintaining a trustworthy ecommerce environment extends to every link in the payment chain. The consequences for failing to meet that standard can be swift and severe.
Stopping fake reviews involves the whole payments chain
To protect both business and the broader integrity of digital commerce, payment providers must treat fake review sales as a serious risk. Regulators, card networks and consumers are demanding greater accountability, making stringent due diligence a necessity. This requires evolving beyond static underwriting or periodic merchant audits.
A modern risk management strategy means greater proactivity in merchant onboarding, continuous monitoring and AI-powered risk assessment. Payment providers that take action won't just avoid costly penalties; they'll play an important part in restoring trust across the entire ecommerce ecosystem. 
Sarah Craven is the director of strategic innovation at G2 Risk Solutions, which provides risk management services to 75 percent of payment acquirers worldwide. Contact her at https://www.linkedin.com/in/sarah-c-522529179.
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